Stock Spirits still suffering Polish hangover

By bne IntelliNews March 13, 2015

Robert Anderson in Prague -


Stock Spirits, the London-listed Central European vodka producer, said that it is still suffering in its key Polish market as it reported adjusted earnings down 20.7% to €66.4mn in 2014.

Stock Spirits issued a profit warning last November and again this January after a 15% hike in Polish excise taxes at the start of 2014 sparked a prolonged price war. Stock Spirits has a 38% share by value of the Polish spirits market, and draws around 60% of its revenue from there.

Chris Heath, chief executive, said the market was taking longer than expected to return to normal, but he predicted this would happen sometime in 2015. Stock Spirits has recently changed its Polish managing director.

“Our strategy of focusing on value rather than volume has served us well in the past and we believe it will do so again, even if it results in further pain in the short term,” he told bne IntelliNews.

Stock Spirits made an increased net profit of €35.8mn – because of one-off factors in 2013 – on net sales down 14% to €292.7mn. It will pay a final dividend of €0.025.

Stock Spirits' shares rose 7.5% on March 12 to £2.05, but the shares remain 28% down on the year and are still trading below their October 2013 flotation price of £2.35.

Heath said the overall Polish spirits market – the third largest in the world by value - had declined 4.3% by volume, but had actually increased 3.1% in value over 2014, showing that underlying consumption trends had remained resilient. 

Stock Spirits’ net sales and Ebitda both fell around 19% in Poland, but the group had managed to keep its Ebitda margin stable at a very high 31.7%, with only a marginal fall in market share. “We remain confident that once the market stabilises, we will deliver strong results,” Heath said.

Stock Spirits has pursued a strategy of “premiumisation” in Central Europe by building its own local premium brands, introducing a range of flavoured vodkas, and signing distribution deals for global brands such as Diageo in the Czech Republic and Beam Suntory in Poland. In 2014 it managed to increase its gross margin by 160 basis points to 52.6%.

Heath said Stock Spirits was “starting to get some real momentum” during its first full year of the distribution deals in 2014. “They give us much better strength at the premium level,” he said. “A large number of consumers of spirits products have aspirations to drink international brands.”

He added that Stock Spirits could also benefit from loyalty to local brands, especially in markets such as Poland where drink advertising was restricted. “Loyalty to well established brands that customers know and trust is very high,” he said.

Despite its problems over the past year, Stock Spirits is continuing to look for acquisitions and Heath said it came close to clinching one deal last year and was still in discussions. “We want businesses that have the potential to become market leaders in two to three years,” he said.

House broker Nomura said in a note that, with a 2014 net det/Ebitda multiple of 1.3-times, “the company has significant firepower (c€150m) to finance deals from cash. We also believe that Stock could offer an interesting CE European platform for acquisition by an international spirits company.”

Nomura estimates that Stock Spirits' shares trade at a 2015 price/earnings ratio of 16.0, against a spirits segment average of 21.3. 

Related Articles

UK demands for EU reform provoke fury in Visegrad

bne IntelliNews - The Visegrad states raised a chorus of objection on November 10 as the UK prime minister demanded his country's welfare system be allowed to discriminate between EU citizens. The ... more

Czech food producer Hame seen next on the menu for Chinese giant

bne IntelliNews - Following a smorgasbord of acquisitions in late summer, China Energy Company Limited (CEFC) is eyeing yet another small Czech purchase, with food ... more

INTERVIEW: Babis slams coalition partners, but Czech govt seems safe for now

Benjamin Cunningham in Prague - Even as the Czech governing coalition remains in place and broadly popular, tensions between Prime Minister Bohuslav Sobotka and Finance Minister Andrej Babis remain ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.